US regulators subpoena law firm, lobbyist in healthcare case -report

05/02/2013

* Probe highlights so-called "political intelligence" sector

* SEC subpoenas DC firm, analyst, lobbyist targeted-report

* Medicare agency has launched internal review

* GAO has said such information hard to quantify

WASHINGTON, May 2 (Reuters) - U.S. regulators are investigating a Washington-based law firm, a securities analyst and healthcare lobbyist and have issued subpoenas as part of a wider probe, according to a media report.

The U.S. Securities and Exchange Commission has subpoenaed an analyst with Height Securities, and Mark Hayes, a lobbyist who advised the capital markets firm, as well as Hayes' law firm Greenberg Traurig, The Washington Post reported, citing sources who could not be named because of the investigation.

The Federal Bureau of Investigation and the U.S. Department of Justice are also involved in the probe, according to the report published on the newspaper's website late Wednesday.

SEC spokesman John Nestor declined to comment to Reuters on the report. Justice Department spokeswoman Nanda Chitre said the department could not confirm or deny whether the incident was under investigation.

Attorneys and company officials for the parties involved have denied any wrongdoing, the Post said.

At issue is the possible leak of an April 1 decision on government payment rates for private Medicare health insurance plans for seniors known as Medicare Advantage. The government said it would raise reimbursement rates, reversing an initial proposal from February to cut the rate 2.3 percent.

The probe began after a report last month in The Wall Street Journal, which first reported the issue and said a report by Height - saying the announcement would favor insurers - may have prompted the stock swing, the Washington Post said.

Companies whose share prices surged on the possible leak included Humana Inc, which derives about two-thirds of its revenue from the Medicare Advantage Business, UnitedHealth Group Inc and Aetna Inc.

The potential leak highlights the so-called "political intelligence" industry where Washington power players with close ties try to advise Wall Street on legislative affairs, regulations and other government actions that can affect various industries.

Centers for Medicare and Medicaid Services' Acting Administrator Marilyn Tavenner last month told a Senate panel that the potential leak was "a huge issue," and vowed to do an internal review.

Humana has also announced an internal review of the events around the April 1 announcement.

Investigators with the Government Accountability Office, the investigative arm of Congress, said last month that the agency could not put a price tag on the sales of political intelligence or how much of that insider information was actually flowing.

"What is most difficult to measure is the extent to which investment decisions are based on a single piece of government information or political intelligence," they wrote in a report requested by Congress before the current incident.



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